Slow economic growth, rising geopolitical tensions, and
increasing trade uncertainties drive down overall optimism
levels
LONDON, Jan. 23,
2025 /PRNewswire/ -- Dun & Bradstreet (NYSE:DNB),
a leading global provider of business decisioning data and
analytics, today released its Q1 2025 Global Business Optimism
Insights report. The survey, conducted during November 2024, revealed a 12.9%
quarter-over-quarter decline in the Global Business Optimism Index
for Q1 2025, reflective of growing concerns over weak economic
growth, rising geopolitical risks, and trade policy
uncertainties.
This shift suggests a redirection from previously elevated
optimism levels seen in the latter half of 2024 and indicates a
more cautious approach by businesses, particularly in terms of
supply chain stability and investment strategies. The anticipation
of policy changes from the new U.S. administration may have also
contributed to lower optimism. Despite this quarterly decline, 30
of 32 economies show optimism levels above those seen in Q1 2024,
signaling a correction from previously elevated optimism levels
rather than a bleak outlook.
"Survey respondents have a guarded outlook for the quarter ahead
due to the evolving economic and political landscape that may
impact how the world does business," said Neeraj Sahai, President of Dun & Bradstreet
International. "Optimism levels for supply chain risks vary across
business size with large businesses indicating increased optimism
and resilience by leveraging their economies of scale and reliance
on alternative sourcing. Medium-sized businesses experienced the
sharpest deterioration with a 36% decline, indicating that these
businesses have not been able to counter the challenges posed by
cross-country trade, while simultaneously facing insufficient local
supplies, further showing heightened concern on the supply chain
continuity front. Small businesses had a moderate decline of
3.5%."
Key findings from the Q1 2025 report:
- The Global Business Optimism Index dropped by
12.9%, its first decline since the series began, with all 32
surveyed economies seeing a downturn, reflecting heightened
economic uncertainty, geopolitical tensions, and sluggish growth.
However, for over 90% of the economies, the optimism levels remain
above Q1 2024, signaling a correction from previously elevated
optimism levels.
o Over 80% of the economies reported a decline in optimism
for new export orders, with almost half of them having more than
10% trade exposure to either the U.S. or the Chinese Mainland.
- The Global Supply Chain Continuity
Index deteriorated by 10.4% after three quarters of
improvement. Persistent challenges such as freight costs, container
shortages, and geopolitical disruptions, as well as payment delays,
contributed to this decline.
o Optimism among large businesses improved 10.7% due to
their economies of scale and reliance on alternative sourcing.
Medium-sized businesses lagged with 66% reporting lower optimism.
Small businesses, despite a 3.5% decline, are optimistic about
delivery times, delivery costs, and supplier concentration due to
their ability to source locally and relocate production bases.
- The Global Business Financial Confidence
Index declined 8.9%, for both advanced and emerging
economies, with over 90% of the economies reporting a decline in
their financial confidence index.
o This decline can be attributed to the uncertain
macroeconomic environment, weak demand outlook, increased balance
sheet risk, and declining financial risk appetite, especially among
small and medium-sized businesses. Optimism among large businesses,
in contrast, improved 12.7%.
- The Global Business Investment Confidence
Index decreased by 4.7%, though it is still 12% higher
than the 5-quarter average, reflecting commitments by many central
banks to lower their policy rates.
o Globally, 66% of businesses reported a need to raise
long-term funds, a significant decline from 71% in the previous
quarter. M&A activity remains a bright spot, with 78% of
businesses anticipating a conducive environment.
- The Global Business ESG Index rose 2.4%,
highlighting businesses' focus on sustainability despite
challenging economic conditions.
o Notably, responses highlighted the differing strategies
between the U.S. and the European Union to increase budgets for
sustainability initiatives in Q1, particularly in automotive
manufacturing spending, likely due to varying expectations of
policy changes that may impact budget allocations.
"Businesses have entered the new year with subdued expectations
for Q1 2025 and are grappling with supplier risk as only 51%
of businesses expressed confidence in managing supplier
concentration risk, compared with 59% in Q4," said Arun Singh, Global Chief Economist at Dun &
Bradstreet. "Further, central banks globally are implementing
interest rate cuts, yet the cost of capital is perceived to remain
elevated, indicating heightened credit risk. This is also
accentuated by lower optimism for sales and profitability."
Descriptions and information about the indices can be found on
page 31 of the report.
About the Global Business Optimism Insights Report
The Global Business Optimism Insights report is a synthesis of
data from a comprehensive survey encompassing 32 economies,
covering approximately 10,000 businesses and 17 sectors, alongside
insights from Dun & Bradstreet, leveraging the firm's
proprietary data and economic expertise. The report is an
amalgamation of five indices which reflect overall business
optimism and expectations about supply chain continuity, financial
and investment conditions and ESG initiatives. An index reading
above 100 indicates an improvement in optimism relative to the base
year, while an index reading below 100 signifies a deterioration in
optimism.
View the full report here.
About Dun & Bradstreet
Dun & Bradstreet, a leading global provider of business
decisioning data and analytics, enables companies around the world
to improve their business performance. Dun & Bradstreet's Data
Cloud fuels solutions and delivers insights that empower customers
to accelerate revenue, lower cost, mitigate risk, and transform
their businesses. Since 1841, companies of every size have relied
on Dun & Bradstreet to help them manage risk and reveal
opportunity. For more information on Dun & Bradstreet, please
visit www.dnb.com.
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